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With most agencies and brands operating at reduced capacity, and the effects of COVID-19 dominating business news, there’s currently not much interest in our glorious advertising world. The trades are quickly running out of idiot ‘What will marketing look like after the pandemic?’ And self-promoting CEOs have composed almost all the ‘tired Coronaviruses’ that will change all “opinion pieces that can fill an editor’s neck.
Consequently, Publicis received a lot of undeserved ink last week for a trick its CEO, Arthur Sadoun, is selling called The Pact. The Compact “guarantees” to medium-sized companies, those with sales of 10 million to 1 billion, and who spend at least $ 25,000 a month on online advertising, which will return all fees if certain KPI criteria are not met (key indicator performance). Every time you hear the term ‘KPI’ run to cover yourself.
To learn a little more about this, let me tell you about my experience with these types of performance guarantees. He was an editor who, through a series of comic mishaps, ended up as CEO of some agencies. The truth is that the only part of the advertising that I really enjoyed was the creative part. Everything else was agony. The most agonizing agony occurred when I had to negotiate compensation agreements with clients. I hated it. But there was an exception.
The exception occurred when a genius client appeared and demanded that our compensation be ‘results-oriented’. When that happened, I knew I had a fish.
You see, isolating the effect of advertising from all other components of marketing success (product quality, price, distribution, promotional activity, competitor actions) is practically impossible unless you are in the direct response business. Therefore, I would be happy to accept any KPI that a customer could dream of, provided two principles were recognized:
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We could not be responsible for things that we could not control (product quality, price, distribution, promotional activity, competitor actions)
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All analysis of results had to be objective, not subjective.
These tipped all the KPIs in my direction. Once these terms were agreed, the “results-oriented” compensation agreement became little more than a guarantee of media delivery. And delivering a media target turns out to be much easier than delivering real money.
We do not know what Publicis is guaranteeing. According to MediaPost, “Each agreement will be tailored specifically to the company with agreed KPIs.” I know one thing for sure: Publicis will be torturing the KPI shit.
If they are willing to guarantee things that they cannot control, they are idiots. If given some form of control, they will simply implement the old direct response formula: one price promotion after another. This is how you clean a fish.
Bob Hoffman is the author of four best-selling books on advertising, a popular international speaker on advertising and marketing, and the creator of the first-ever newsletter ‘The Ad Contrarian’ and blog. Earlier in his career, he was CEO of two independent agencies and the US operation of an international agency. His latest book, ‘Advertising For Skeptics’, is now available.
